German retailer Kaufland has halted the planned expansion of its online grocery service to the city of Hamburg, according to reports by newspaper Heilbronner Stimme.
Kaufland launched the service in Berlin one year ago, and says that consumer demand has been high, however, a spokesperson told the publication that the company has postponed the roll-out to Hamburg, and will continue to focus on the Berlin service for the moment.
The sister retailer of discount giant Lidl, both operated by the Schwarz Group, said that in future it still plans to offer delivery services in Hamburg, as well as Munich, Frankfurt and Düsseldorf.
Lebensmittel Zeitung suggests that cost has been an issue with Kaufland's online grocery service.
"In contrast to competitors like Rewe, the products Kaufland offered online were at the same price level as instore," said Denise Klug, senior retail analyst at Lebensmittel Zeitung.
"This might have helped the banner to maintain its image of being an affordable shopping destination but also has an impact on margins and cost structure. The fact that the roll-out of the concept was now been put on ice indicates that this remains a concern."
There is a lot of competition in the German grocery delivery market. AmazonFresh launched its online supermarket in Berlin in May, offering same-day delivery on thousands of products, before extending its service to Hamburg in July.
In response, Edeka announced that its online shopping platform Bringmeister would also offer a same day delivery service in the capital city.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.